Price taker = firm which lacks power to influence ruling market price price maker = firm possessing the power to set price within the market monopoly power = power of a firm to act as a price maker rather than taker
1 of 16
market structure
the organisational and other characteristics of a market (no. of firms + type of product + Barriers to entry)
2 of 16
profit satisficing
making a level of profit where maximising benefits if all stakeholders - occurs coz there is a divorce of ownership & control - conflict between objectives of stakeholders
3 of 16
profit maximisation
occurs when a firm's total sales revenue as furtherest above total CofP, MR=MC
4 of 16
Static efficiency
efficiency at a particular point in time Productive (level of output at which AC are minimised) Allocative (occurs when resources are allocated in line with consumer preference - can't improve economic welfare by reallocating resources, P=MC)
5 of 16
Dynamic efficiency
productive efficiency of a firm over a period of time - can reduce AC by implementing new production processes
6 of 16
oligopoly
market in which few large firms dominate industry - interdependence, high barriers to entry, high concentration ratios
make agreements amongst themselves & form cartel so as to restrict competition & maximise own benefits - overt (full public view) covert (avoid detection) Tacit (no formal agreement)
9 of 16
cooperation
allowed in markets - how a firm is organised/how production is managed - beneficial to public
10 of 16
non-price strategies
competing oligopolists prefer non-price competition to avoid price wars - aims to increase brand loyalty - maker D more inelastic
11 of 16
Kinked demand curve
explains why price in oligopolist market can remain stable even when there is no collusion between the firms
12 of 16
sources of monopoly
natural monopoly = when only room in market for 1 firm benefitting from full EofS geographical causes = country is only source of raw material govt. created monopoly = feel markets too important to leave to comp.
13 of 16
price discrimination
occurs when firm charges diff price to diff groups of consumers for identical good/service 1st degree (every consumer charges what they're willing to pay) 3rd degree (diff elasticises of D)
14 of 16
contestable markets
market in which new firms able to enter market - perfectly contestable have no entry/exit barriers & no sunk costs
15 of 16
consumer & producer surplus
CS = the difference between the price consumers are willing & able to pay and the price they actually pay PS = the difference between the price producers are willing & able to supply for and the price they actually receive
16 of 16
Other cards in this set
Card 2
Front
the organisational and other characteristics of a market (no. of firms + type of product + Barriers to entry)
Back
market structure
Card 3
Front
making a level of profit where maximising benefits if all stakeholders - occurs coz there is a divorce of ownership & control - conflict between objectives of stakeholders
Back
Card 4
Front
occurs when a firm's total sales revenue as furtherest above total CofP, MR=MC
Back
Card 5
Front
efficiency at a particular point in time Productive (level of output at which AC are minimised) Allocative (occurs when resources are allocated in line with consumer preference - can't improve economic welfare by reallocating resources, P=MC)
Comments
No comments have yet been made